Marketplace Lender ApplePie Starts With $25M Loan Demand

ApplePie Capital, one of the newer players in the marketplace lending space reported last week (Feb. 11) that its loan demand topped $25 million.

The San Francisco-based company was formed with the goal of providing franchisees “a more efficient alternative to traditional lenders,” ApplePie CEO Denise Thomas said in a San Francisco Business Times article. The model of crowdsourcing investments for franchisees mirrors the processes of Lending Club, but with a greater emphasis on accredited investors. ApplePie is know for its “high-profile backers,” the article points out, which includes QED Investors, a group that helped raise $3.7 million in seed money. That investment group’s managing director is Nigel Morris, Capital One’s co-founder.

“The strong demand that we’ve seen from the franchise industry in just a few months shows that franchise entrepreneurs are in real need of a more efficient alternative to traditional lenders,” Thomas told San Francisco Business Times. “We bring unprecedented speed and efficiency to franchise borrowers who for decades have relied on time-consuming, offline processes.”

ApplePie kicked off its franchise lending by working with Colorado-based Phenix Salon Suites to secure a $150,000 loan to remodel one of its stores. Einstein Bros Bagels franchise is another early lender of the lending company, which secured a $465,000 loan, according to the article.

“We pursued the traditional banking route and found it extremely daunting. Through SBA financing, you lock up assets through collateralization that may be needed for future stores, said Marty Mares, an Einstein Bros Bagels’ area developer, about the loan process. “The [ApplePie] loan provided financial flexibility that an SBA loan simply didn’t offer.”

The success behind ApplePie’s strategy was cited as having the ability to finance the loans from capital provided by accredited investors or drawing from other capital pools. This is said to help turn around loans faster. Investors must make a minimum investment of $1,000, which helps encourage portfolio diversification. Loans typically carry 8-12 percent interest rates that are secured by business and personal guarantees.